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Demat refers to a dematerialised account for individual citizens to trade in listed stocks or debentures, required for investors by The Securities Exchange Board of India (SEBI).

In a Demat account, shares and securities are held electronically instead of the investor taking physical possession of certificates. A Demat Account is opened by the investor while registering with an investment broker (or sub broker). The Demat account number is quoted for all transactions to enable electronic settlements of trades to take place.

How to open a Demat Account?

First, You approach a DP and fill up the Demat account-opening form. The account opening form must be supported by copies of the following approved documents:

Proof of identity

proof of address

Pan number (mandatory effective from April 1, 2006)

Six months bank statement

Two cheques, one cancelled and one margin cheque

All applicants should carry original documents for verification by an authorized official of the depository participant, under his signature. Further, the investor has to sign an agreement with DP in a depository prescribed standard format, which details rights and duties of investor and DP.

Demat Benefits:

It's a safe and convenient way to hold securities

Immediate transfer of securities.

There is no stamp duty on transfer of securities

There is a major reduction in paperwork involved in transfer of securities,reduction in transaction cost etc.

Holding investments in equity and debt instruments in a single account.

Automatic credit into demat account of shares, arising out of bonus/split/consolidation/merger etc.